Confidential
Settlement – $230,000Court
L.A. Superior Central
Attorneys
Plaintiff
Defendant
Jeffrey A. Rich
(Office of the Attorney General)
Facts
The plaintiff is a 24-hour travel bureau that provides travel-related services to travel agencies, travel carriers and travelers. The plaintiff's business is cultivated and maintained principally through the telephone. The plaintiff's revenues are generated by travel agencies who subscribe to and use the plaintiff's services via telephone and facsimile transmission. Towards the end of 1993, the plaintiff decided that in order for it to keep growing and remain competitive, it needed to expand and modernize its telephone system. After interviewing prospective vendors, on or about Nov. 30, 1993, the plaintiff entered into a written equipment purchase and software agreement with the defendant telephone company to purchase an elaborate and sophisticated phone system, including hardware and software, for the purchase price of $132,970.91. The telephone system was to automatically identify and distribute calls to the right agent depending upon the caller's requirements, produce sophisticated reports, and contain an elaborate voice mail and prompt system allowing automatic routing of calls. On Feb. 28, 1994, the plaintiff's existing telephone system was shut down and the defendant's telephone system was placed in operation. On that day, and subsequently, the plaintiff's telephone system experienced literally thousands of problems, ranging from minor problems with buttons on the individual telephones to complete crashes of the system, rendering the plaintiff without any telephone service for days. The defendant refused to provide the plaintiff with technical support or to service their proprietary software and equipment. The plaintiff finally removed the telephone system and purchased another vendor's system. The plaintiff brought this action against the defendant based on fraud, breach of contract and breach of warranty theories of recovery.
Settlement Discussions
The settlement discussions were not disclosed.
Damages
The plaintiff claimed approximately $250,000 in damages.
Other Information
The settlement was reached approximately one year after the case was filed. A mediation was held on May 29, 1996 before Mediation Alliance Group Inc., resulting in the reported settlement. Per plaintiff's counsel, the parties originally agreed to settle the case for approximately $150,000, but the defendant backed out of the settlement. Plaintiff's counsel claimed that later, at a court-ordered mediation, the defendant raised its offer to the final settlement figure of $230,000. Plaintiff's counsel commended that the mediator should be "commenced for bringing the matter to resolution, as substantial mistrust was initially present at the mediation."
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